10. a. Suppose there is a technological breakthrough that increases the productivity of all capital and,...

 

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10. a. Suppose there is a technological breakthrough that increases the productivity of all capital and, consequently, increases the demand for investment. Using the long-run model of the economy, graphically illustrate the impact of the increased investment demand. Be sure to label: i. the axes; ii. the curves; iii. The initial equilibrium values; iv. The direction curves shift; and v. the terminal I equilibrium values b. State in words what happens to: i. the real interest rate; ii. national saving; iii. investment; iv. consumption; and v. output 10. a. Suppose there is a technological breakthrough that increases the productivity of all capital and, consequently, increases the demand for investment. Using the long-run model of the economy, graphically illustrate the impact of the increased investment demand. Be sure to label: i. the axes; ii. the curves; iii. The initial equilibrium values; iv. The direction curves shift; and v. the terminal I equilibrium values b. State in words what happens to: i. the real interest rate; ii. national saving; iii. investment; iv. consumption; and v. output